On Tuesday, Cantor Fitzgerald initiated coverage on Zapata Computing (NASDAQ:ZPTA), an enterprise software company specializing in Industrial Generative Artificial Intelligence (Gen AI), with an Overweight rating and a price target of $1.75. The firm highlighted Zapata's use of advanced mathematical concepts from quantum physics and computing, which provide significant advantages over traditional computing techniques.
The analyst pointed out that concerns from over five years ago about quantum computers making current cryptography methods obsolete have not materialized yet. However, they suggested that investors start establishing exposure to quantum computing through companies like Zapata AI, anticipating hyper revenue growth beginning next year.
Zapata AI's software stack, Orquestra, is valued for its ability to deliver models that are faster, smaller, lower cost, and more accurate than those of leading traditional computing vendors. The company aims at a total addressable market (TAM) of more than $300 billion, working on building its pipeline and converting bookings into revenue to support an expected growth rate of 2x for the next year.
Since beginning trading on the Nasdaq on April 1, Zapata AI has seen a significant decrease in its stock price from its $10.00 merger/reset price, now trading down by approximately 95%. Cantor Fitzgerald recommends investors to consider Zapata AI as an under followed small/micro-cap Industrial Gen AI/ML name, especially as the firm believes the first half of 2024's volatility in the general technology software sector presents an attractive entry point.
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